Closing is the phase in the Boston condo process when money and documents are transferred in order to transfer ownership of your Boston high rise condo to the buyer. In a successful closing, both buyer and seller fulfill the agreements made in the contract. The seller will pay off all loans on the property to clear title, and the buyer and their lender will wire transfer money to cover the balance owed on the purchase.
Closing costs are an assortment of fees—separate from agent commissions—that are paid by both buyers and sellers at the close of a real estate transaction. In total, the costs range from my experience 3% to 5% of the sale price, but sellers typically pay anywhere from 1% to 3%, according to Realtor.com.
A word of caution, though — selling your home isn’t as simple as accepting an offer and pocketing the cash. Zillow actually estimates that selling a home costs $20,851, on average, while other experts estimate you’ll pay 10% of your home’s final sale price in closing costs.
Congratulations on deciding to sell your Back Bay condo! Whether you’re upgrading, moving to a new area, or simply finding a place that better suits your needs, moving can be a welcome change and an exciting time.
There are many hidden costs to selling a home but also some ways to reduce those costs. We’ll guide you through all that in this article, so keep reading!
Let’s start with the largest cost of selling your Boston Seaport condos for sale — commissions paid to your Boston real estate broker and the buyer’s agent. Commissions can sometimes be unexpected costs for home sellers.
Generally, each party — buyer and seller — has their own agent to negotiate and advocate on their behalf. Although commission rates can vary by state, you’ll usually pay about 6% of the final sales price in agent commissions — with 3% going to your listing agent and 3% going to the buyer’s agent. Thus, you, the seller, traditionally pay commissions for both agents participating in the sale.
For example, if your home sells for $500,000, you would pay $20,000 total — $10,000 to each agent. You won’t need to pay for these commissions upfront, but they will be subtracted from your profit at closing.
Some sellers opt to do the work themselves and list their home as a for-sale-by-owner (FSBO) to save on commissions. If you opt for this route, keep in mind that buyers may still expect that you’ll pay their buyer’s agent commission of around 3% and that FSBOs typically sell for less.
A happy medium may be negotiating a lower commission or working with a flat-fee agent — one who agrees to provide the same services as a traditional agent but for a lower, flat-fee commission. You may be wondering why an agent would agree to this: The answer is that they’re usually able to receive a larger volume of leads and close more deals with this arrangement. It can be a win-win for both you and your agent.
On the day of your closing — the day you hand over the keys of your home to its new owner — you’ll pay agent commissions, along with the rest of your closing costs. Lots of little fees and taxes add up to your final closing costs amount and, as a seller, you’ll usually pay a lot more in these costs than the buyer, as theirs are usually associated with their loan.
Traditionally, you’ll split some costs with the buyer — including title insurance. Before your closing, a title company will run a title search of your property, and whether the buyer or seller pays varies state to state.
A title search reveals any liens, easements, or unpaid taxes that may prevent the buyer from taking full ownership of the house. As their guarantee, a title company then provides title insurance — for a fee, of course — that protects both you and the buyer if anything was overlooked. The seller usually pays for the buyer’s insurance and the buyer for the seller’s insurance.
You’ll also pay the transfer tax to legally transfer the title to the new owner and other real estate-related fees to your city, county, or state. You may also need to pay prorated real estate taxes depending on what month you sell your home.
Another cost to the seller is an escrow fee. This covers the cost of the agent or attorney who manages the holding and transfer of funds. Your settlement statement will tell you exactly what you’ll pay at closing.
All together, these taxes and fees add up to around 2% to 4% of the sale price for a seller. Add this to your real estate commissions, and you can expect to pay 8% to 10% of the home sale price in closing costs.
Seventy-seven percent of buyer’s agents say a home that’s staged helps buyers visualize themselves living in the home. Staged homes also sell more quickly and for a higher price — 88% faster and for 20% more than non-staged homes, to be exact.
So, while you may balk at the price tag of hiring a professional stager, it will usually pay off, especially if you own a home in a higher price range. For example, it may cost you $1,000 or more in staging costs on a $200,000 home. But, you could get $40,000 more in the selling price. It’s not hard to do the math and reach the conclusion that it’s a good bang for your buck.
In addition to staging, you may also consider hiring a professional or renting a carpet cleaner to deep clean your home. Both these items help elevate the look of your home and alert potential buyers to the great care you’ve taken of your home.
If you have pets, prioritize professional cleaning to help get out the animal smell, and consider paying to board them while potential buyers are touring your home.
You’ll come across two different types of repair costs when selling your home: repairs you make before putting your home on the market and buyer-requested repairs.
The first repairs are those you’ll want to make before listing your home in order to entice potential buyers. Just like staging, making repairs before putting a home on the market can make it more intriguing to buyers. Work closely with your real estate agent to decide which projects you should take on based on how many upfront costs you can handle and how much time you have.
Your agent can also guide you to projects that may generate a higher selling price or may turn off potential buyers if not fixed. These may be major fixes such as replacing a 30-year-old roof or a full kitchen remodel or relatively cheap upgrades such as replacing stained carpeting or painting over that lime green living room.
Cost of these repairs can vary greatly depending on how well you’ve kept up with regular home maintenance. If you’ve deferred repairs and maintenance, plan to spend more. Although replacing an HVAC system could cost a lot upfront, it could generate even more in the form of a higher offer.
The second type of repair costs are those a buyer requests. After you’ve accepted a buyer’s offer, it doesn’t mean you’ll get to sit back until your closing date. Inevitably, when the buyer has the home inspected, they’ll request at least some repairs.
Although you can always negotiate or flat out refuse the requests, it’s best to work with the buyer so the deal doesn’t fall through. Again, the dollar amount of these repairs varies greatly based on the age and upkeep of the home.
Another oft-forgotten cost associated with selling your home is the price you’ll pay to move your stuff from one home to another.
Moving costs may include renting a moving truck or crew, storage costs, and costs for staying at a hotel if you’re moving across the country.
The average cost of an in-state household move is $2,300, while an out-of-state move is $4,300. Plan for even more if you’re moving to another country.
Holdover costs are those bills you pay when you’re technically inhabiting two homes. Unless you’re able to pair up the closing dates of the home you’re selling and the one you’re buying (and are able to move in one day!), you’ll likely have at least some overlap of bills.
These double payments may include mortgage payments, utility bills, homeowner’s insurance, and possibly even real estate taxes. To cut down on these amounts, try to keep your closing dates as close as possible while still allowing enough time for your big move.
Just by knowing what costs await you when selling your home means you’re ahead of the game.
Planning ahead means you can make sure you have the upfront money needed for repairs to help your home sell and possibly reduce variable costs such as commissions and holdover costs. Happy selling!
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